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Stories about electricity supply shortages in South Africa have become a fairly regular feature in the country’s news, and the opening weeks of 2012 showed no deviation from this trend, especially with demand expected to continue its upward trajectory. The country’s key electricity planning document, the Integrated Resource Plan 2010 (IRP2010), which is a living document that is expected to be continuously revised and updated, forecasts demand of 67 809 MW in 2030 and outlines a programme of developments to bring supply to 89 532 MW at that time, ensuring that supply is in excess of demand.

The breakdown of how this generation capacity will be achieved, as envisaged by the IRP2010, will see a shift in the structure of South Africa’s electricity generation sector such that, while State-owned power utility Eskom will continue to be the country’s dominant supplier of electricity, independent power producers (IPPs) will play a greater role in the market than is currently the case. In fact, the policy-adjusted IRP seems to perceive IPPs as central to diversifying South Africa’s coal-heavy energy mix. This report in addition to discussing the role of IPPs in South Africa's future power generation mix, examines South Africa's electricity industry and issues such as the current state of the country's electricity generation, transmission and distribution, as well as investment in generation capacity.

The report draws on information available in the public domain. The report does not purport to provide analysis of market trends.

Published: 07 March 2012.

Table of contents

List of abbreviations 1

Key developments 2

State of electricity generation 3–6

• Generation planning 4
• Demand planning 5

Eskom’s generation investment 7–13

• Baseload projects 7
• Peaking projects 10
• Funding 10

Independent power producers 14–18

• DOE IPP projects 14
• Renewable IPP projects 14
• Self-generation projects 17
• Facilitating the introduction of IPPs 18

Demand-focused initiatives 19–21

• Demand market participation 19
• Energy efficiency and demand-side management 20
• Energy conservation scheme 20

State of electricity transmission 22–23

State of electricity distribution 24–26

• Structure and restructuring 24
• Maintenance and investment backlog 25
• Electrification and free basic electricity 25

Outlook 27

Appendix 1: Eskom’s power station capacities 28

Appendix 2: Project summary 29

Appendix 3: Supplier news 30–32

Main sources 33–34